Income Tax Slab Rates for FY 2016-17 / AY 2017-18
Income Tax Slab Rates for FY 2016-17 ( AY 2017-18 ) as per Income Tax act of India (Finance Act 2017 )
1. Introduction
1.1 The Finance Act, 2017 (hereafter referred to as ‘the Act’) as passed by the Parliament, received the assent of the President on the 31st day of March, 2017 and has been enacted as Act No. 7 of 2017. CIRCULAR No. 2/2018 Dated 15.02.2018 explains the substance of the provisions of the Act relating to direct taxes.
2. Changes made by the Act
2.1 The Act has-
| (i) | specified the rates of income-tax for the assessment year 2018-19 and the rates of income-tax on the basis of which tax has to be deducted at source and advance tax has to be paid during financial year 2017-18; | |
| (ii) | amended sections 2, 9, 9A, 10, 10AA, 11, 12A, 12AA, 13A, 23, 35AD, 36, 40A, 43, 43B, 43D, 44AA, 44AB, 44AD, 45, 47, 48, 49, 54EC, 55, 56, 58, 71, 79, 80CCD, 80CCG, 80G, 80-IAC, 80-IBA, 87A, 90, 90A, 92BA, 115BBDA, 115JAA, 115JB, 115JD, 119, 132, 132A, 133, 133A, 133C, 139, 140A, 143, 153,153A, 153B, 153C, 155, 194J, 194LA, 194LC, 194LD, 197A, 204, 206C, 211, 234C, 244A, 245A, 245N, 245-O, 245Q, 253, 271F and 273B of the Income-tax Act, 1961 (‘the Income-tax Act’); | |
| (iii) | inserted new sections 50CA, 92CE, 94B, 115BBG, 139AA, 194-IB, 194-IC, 206CC, 234F, 241A, 269ST, 271DA and 271J in the Income-tax Act; | |
| (v) | amended sections 50 and 197 of the Finance Act, 2016. |
3. Rate structure
3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2017-18.
3.1.1 Part I of the First Schedule to the Act specifies the rates of income-tax in respect of incomes of all categories of assessees liable to tax for the assessment year 2017-18. These rates are the same as those laid down in Part III of the First Schedule to the Finance Act, 2016 as amended by the Taxation Laws (Second Amendment) Act, 2016 (No. 48 of 2016) for the purposes of computation of ‚advance tax‛, deduction of tax at source from ‚Salaries‛ and charging of tax payable in certain cases during the financial year 2016-17.
The main features of the rates specified in the said Part I are as follows:
3.1.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person.
Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) as under:-
| Income chargeable to tax | Rate of income-tax | |
| Individual (other than senior and very senior citizen), HUF, association of persons, body of individuals and artificial juridical person. | Individual, resident in India who is of the age of sixty years or more but less than eighty years (senior citizen) | |
| Up to Rs. 2,50,000 | Nil | Nil |
| Rs. 2,50,001 – Rs. 3,00,000 | 10% | 10% |
| Rs. 3,00,001 – Rs. 5,00,000 | ||
| Rs. 5,00,001 – Rs. 10,00,000 | 20% | 20% |
| Exceeding Rs. 10,00,000 | 30% | 30% |
The amount of income-tax so computed shall be increased by a surcharge at the rate of fifteen per cent of such income-tax in case of a person having a total income exceeding one crore rupees. However, marginal relief shall be available so the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge.
No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
For instance, if the income of an individual below sixty years of age is Rs. 1,01,00,000 and income-tax computed is Rs. 28,55,000/-. Surcharge on the income-tax at the rate of fifteen per cent of such tax is Rs. 4,28,250/-. Thus the total income-tax inclusive of surcharge is Rs. 32,83,250/- without providing marginal relief. On providing marginal relief, the income-tax inclusive of surcharge shall be limited to Rs. 29,55,000/-. Then the education cess of two per cent is to be computed on Rs. 29,55,000/- which works out to Rs. 59,100/-. In addition, the amount of tax computed shall also be increased by an additional cess called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax which for the present case of income-tax of Rs. 29,55,000/- works out to be Rs. 29,550/-. Thus, where the amount of tax computed is Rs. 29,55,000/-, the Education Cess of two per cent is Rs. 59,100/-, the Secondary and Higher Education Cess is Rs. 29,550/-. The total cess in this case will amount to Rs. 88,650/-(i.e. Rs. 59,100/- + Rs. 29,550/-). No marginal relief shall be available in respect of such cess.
3.1.3 Co-operative Societies.
Paragraph B of Part I of the First Schedule to the Act specifies the rates of income-tax in the case of every co-operative society as under:-
| Income chargeable to tax | Rate |
| Up to Rs. 10,000 | 10% |
| Rs. 10,001 to Rs. 20,000 | 20% |
| Exceeding Rs. 20,000 | 30% |
The amount of income-tax so computed shall be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a co-operative society having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge.
No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.1.4 Firms.
Paragraph C of Part I of the First Schedule to the Act specifies the rate of income-tax as thirty per cent in the case of every firm.
The amount of income-tax so computed shall be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a firm having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge.
No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.1.5 Local Authorities.
Paragraph D of Part I of the First Schedule to the Act specifies the rate of income-tax as thirty per cent in the case of every local authority.
The amount of income-tax so computed shall be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge.
No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.1.6 Companies.
Paragraph E of Part I of the First Schedule to the Act specifies the rates of income-tax in the case of a company.
In case of a domestic company, the rate of income-tax is__
| (a) | twenty nine per cent of the total income, if the total turnover or gross receipts of the company in the previous year 2014-15 does not exceed five crore rupees; | |
| (b) | twenty-five per cent of the total income at the option of the company, if it satisfies the conditions contained under section 115BA of the Income-tax Act; | |
| (c) | thirty per cent of the total income, in all other cases. |
The tax computed shall be enhanced by a surcharge of seven per cent where such domestic company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of twelve per cent shall be levied if the total income of the company exceeds ten crore rupees.
In the case of a company other than a domestic company, income from royalties received from Government or an Indian concern, under an approved agreement made after 31.03.1961 but before 01.04.1976, shall be taxed at fifty per cent. Similarly, income from fees for technical services received by such company from Government or an Indian concern, under an approved agreement made after 29.02.1964 but before 01.04.1976, shall be taxed at fifty per cent. On the balance of the total income of such company, the tax rate shall be forty per cent. The tax computed shall be enhanced by a surcharge of two per cent where such company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of five per cent shall be levied if the total income of such company exceeds ten crore rupees.
However, marginal relief shall be allowed in the case of every company to ensure that: (i) the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees, (ii) the total amount payable as income-tax and surcharge on total income exceeding ten crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees.
Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed, inclusive of surcharge in the case of every company. Also, such amount of tax and surcharge shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of the amount of tax computed, inclusive of surcharge.
No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.2 Rates for deduction of income-tax at source from certain incomes during the financial year 2017-18.
3.2.1 Part II of the First Schedule to the Act specifies the rates for deduction of income-tax at source during the financial year 2017-18 in every case in which tax is to be deducted at the rates in force under the provisions of sections 193, 194, 194A, 194B, 194BB, 194D, 194LBA, 194LBB, 194LBC and 195 of the Income-tax Act. The rates for deduction of income-tax at source during the financial year 2017-18 will continue to be the same as those specified in Part II of the First Schedule to the Finance Act, 2016.
3.2.2 Surcharge.
The tax deducted at source in the following cases shall be increased by a surcharge, as specified under, for purposes of the Union:
| (i) | in case of every non-resident individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person, the rate of surcharge is__ |
| (a) | ten per cent of such income-tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees; | |
| (b) | fifteen per cent of such income-tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees; |
| (ii) | in the case of every non-resident co-operative society or firm, the rate of surcharge is twelve per cent., where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees; (iii) in case of payments made to foreign companies, the rate of surcharge is__ |
| (a) | two per cent of such income-tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees; | |
| (b) | five per cent of such income-tax where such income or the aggregate of such incomes paid or likely to be paid to a foreign company and subject to the deduction exceeds ten crore rupees. |
| (iv) | No surcharge on tax deducted at source shall be levied in the case of an individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person, co-operative society, local authority, firm, being a resident or a domestic company. |
3.2.3 Education Cess.
Education Cess on income-tax shall continue to be levied for the purposes of the Union at the rate of two per cent of income-tax and surcharge, if any. For instance, if the amount of income of a foreign company is Rs. 1,20,00,000/- and tax to be deducted from such foreign company is Rs. 12,00,000/- at the rate of 10 per cent., then the surcharge at the rate of two per cent on such tax deducted shall be Rs. 24,000/-. Education cess on such amount of tax deducted and surcharge (i.e. Rs. 12,00,000/- + Rs. 24,000/- = Rs. 12,24,000/-) shall be Rs. 24,480/-.
In addition, the amount of tax deducted and surcharge shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent in all such cases. Thus in the above illustration, where the amount of tax deducted is Rs. 12,00,000/-, the surcharge is Rs. 24,000/-, the said Secondary and Higher Education Cess will be computed at the rate of one per cent on Rs. 12,24,000/- which works out to be Rs. 12,240/-. The total cess in this case will, therefore, amount to Rs. 36,720 (i.e. Rs24,480/- + Rs. 12,240/-).
3.3 Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the financial year 2017-18.
3.3.1 Part III of the First Schedule to the Act specifies the rates for deducting income-tax at source from ‘Salaries’ and computing advance tax during the financial year 2017-18. These rates are also applicable for charging income-tax during the financial year 2017-18 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for short duration, etc. The rates are as follows:-
3.3.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person.
Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company). The basic exemption limits, rates of tax and slabs of income for various categories remain the same as in financial year 2015-16.
The rates of tax during the financial year 2016-17 are as follows:-
| Income chargeable to tax | Rate of income- tax | ||
| Individual (other than senior and very senior citizen), HUF, association of persons, body of individuals and artificial juridical person. | Individual, resident in India who is of the age of sixty years or more but less than eighty years. (senior citizen) | ||
| Up to Rs. 2 ,50,000 | Nil | Nil | |
| Rs. 2,50,001 – Rs. 3,00,000 | 5% | ||
| Rs. 3,00,001 – Rs. 5,00,000 | 5% | ||
| Rs. 5,00,001 – Rs. 10,00,000 | 20% | 20% | |
| Exceeding Rs. 10,00,000 | 30% | 30% | |
The amount of income-tax so computed shall be increased by a surcharge at the rate of ten per cent of such income-tax, in case of a person having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, and fifteen per cent of such income-tax, in case of a person having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding,
| (a) | fifty lakh rupees but not exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees; | |
| (b) | one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. |
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.3.3 Co-operative Societies.
Paragraph B of Part III of the First Schedule to the Act specifies the rates of income-tax in the case of every co-operative society. The rates are as follows:-
| Income chargeable to tax | Rate |
| Up to Rs. 10,000 | 10% |
| Rs. 10,001 to Rs. 20,000 | 20% |
| Exceeding Rs. 20,000 | 30% |
The amount of income-tax so computed shall continue to be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a co-operative society having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of income-tax computed inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.3.4 Firms.
Paragraph C of Part III of the First Schedule to the Act specifies the rate of income-tax as thirty per cent in the case of every firm.
The amount of income-tax so computed shall continue to be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a firm having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.3.5 Local Authorities.
Paragraph D of Part III of the First Schedule to the Act specifies the rate of income-tax as thirty per cent in the case of every local authority.
The amount of income-tax so computed shall continue to be increased by a surcharge at the rate of twelve per cent of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of income-tax and surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.3.6 Companies.
Paragraph E of Part III of the First Schedule to the Act specifies the rate of income-tax in the case of a company.
In case of a domestic company, the rate of income-tax is__
| (a) | twenty five per cent of the total income, if the total turnover or gross receipts of the company in the previous year 2015-16 does not exceed fifty crore rupees; | |
| (b) | twenty-five per cent of the total income, at the option of the company, if it satisfies the conditions contained under section 115BA of the Income-tax Act; | |
| (c) | the rate of income-tax is thirty per cent of the total income, in all other cases. |
The tax computed shall continue to be enhanced by a surcharge of seven per cent where such domestic company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of twelve per cent shall continue to be levied if the total income of the company exceeds ten crore rupees.
In the case of a company other than a domestic company, income from royalties received from Government or an Indian concern under an approved agreement, made after 31.03.1961 but before 01.04.1976, shall be taxed at fifty per cent. Similarly, income from fees for technical services received by such company from Government or Indian concern under an approved agreement, made after 29.02.1964 but before 01.04.1976, shall be taxed at fifty per cent. On the balance of the total income of such company, the tax rate shall be forty per cent.
The tax computed shall continue to be enhanced by a surcharge of two per cent where such company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of five per cent shall continue to be levied if the total income of such company exceeds ten crore rupees.
However, marginal relief shall be allowed in the case of every company to ensure that: (i) the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees, (ii) the total amount payable as income-tax and surcharge on total income exceeding ten crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees.
Education Cess on Income-tax and Secondary and Higher Education Cess on income-tax shall continue to be levied at the rate of two per cent and one per cent respectively of the amount of income-tax computed including surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.
3.4 Surcharge on Additional Income-tax.
Where additional income-tax has to be paid under section 115-O or section 115-QA or sub-section (2) of section 115R or section 115TA or section 115TD of the Income-tax Act, that is to say, on distribution of dividend by domestic companies or distribution of income by a company on buy-back of shares from shareholders or on distribution of income by a mutual fund to its unit holders or on distribution of income by a securitisation trust to its investors or on accreted income of certain trusts and institutions, the additional tax so payable shall be increased by a surcharge of twelve per cent of such income-tax
